Final answer:
Victims of predatory lending are typically low-income individuals who were targeted by banks that securitized and sold subprime loans, leading to a financial crisis when these borrowers defaulted.
Step-by-step explanation:
Victims of predatory lending practices are typically low-income individuals. Changes in banking laws allowed financial institutions to pursue these high-risk borrowers aggressively by securitizing and selling off mortgage loans as bonds. Without the direct consequence of defaults affecting them, banks could afford to make bad loans, also known as subprime loans, and consequently not suffer financial repercussions when borrowers failed to repay.
Securitization decreased incentives for banks to vet borrowers carefully. This process led to the creation of NINJA loans – a term describing loans made to consumers with No Income, No Job, or Assets. Predatory lending aimed at low-income individuals contributed to the financial crisis as these borrowers were frequently unable to meet the loan terms, leading to widespread defaults and foreclosures.